IMPORTANT POINTS
Auction sale duly conducted and confirmed by competent authority cannot be assailed except on ground of fraud or collusion.
Unregistered agreement for sale does not vest any legal right in anybody.
Writ petition suffering from delay and laches and without availing statutory remedy of appeal is not maintainable, particularly when third party rights have accrued.

Headnote:(a) Auction sale - Rights of an auction purchaser cannot be extinguished except on grounds of fraud or collusion - Nobody can assail such auction sale. (Paras 12 and 13)
        (2006) 2 SCC 385; (2008) 12 SCC 582; (1887-88) 15 IA 12; AIR 1967 SC 608; (1994) 2 SCC 368; (1996) 7 SCC 668; (1996) 7 SCC 668; (2008) 9 SCC 299 - Relied upon
        (b) Transfer of Property Act, 1882 - Section 54 r/w section 17 (1A), Registration Act, 1908 - Agreement to sale of immovable property to brother - Agreement only notorized - Not registered - Agreement apparently collusive - Does not vest any legal right. (Para 15)
        (c) Estoppel - Respondent abandoning his objection before Recovery Officer in 2005 - Recovery Officer ordering auction sale in 2008 - Respondent assailing the sale by invoking writ jurisdiction of High Court - Not permissible - Respondent cannot approbate and reprobate. (Para 15)
        (d) Recovery of Debts Due to Banks and Financial Institutions Act, 1993 - Section 30 - Act providing remedy of appeal against order of Recovery officer within 30 days - Respondent not availing the statutory remedy of appeal but invoking writ jurisdiction of the High Court - Not permissible. (Para 15)
        (e) Recovery of Debts Due to Banks and Financial Institutions Act, 1993 - Section 29 - Auction sale - Respondent not raising any objection to attachment of property - Not entitled to oppose auction sale. (Para 15)
        (f) Constitution of India - Article 226 - Respondent not raising any objection to attachment of property, auction sale, confirmation of the auction sale, handing over possession of the property, mutation of the property in the name of the auction purchaser - Writ petition not maintainable - Ought to have been dismissed on ground of delay and laches. (Para 15)
        (g) Constitution of India - Article 226 - Property purchased in auction in furtherance of public notices - Auction purchaser bona fide - Third party rights already accrued - Interference by High Court even on ground of equity not justified. (Para 15)
       Facts of the case:
        Allahabad Bank advanced a loan to the partnership firm M/s. Amar Timber Works, whose partners were Jagmohan Singh, Payam Shoghi and Dev Kumar Sinha.
        The firm was situated on the property of Jagmohan Singh. The Firm did not pay back the loan and so recovery proceedings were initiated. The DRT allowed the petition of the Bank and ordered recovery of loan. In the meantime Jagmohan Singh died.
        Brother of Jagmohan Singh, Harender Singh (respondent herein), objected before the Recovery Officer (R.O.) on the ground that he had purchased the property from his brother long back, though not by a registered sale deed. However he did not pursue his objection and the R.O. ordered auction sale of the property.
        The appellant herein being the highest bidder was allowed to purchase the property. The ale was confirmed by the R.O. and possession was handed over to the appellant.
        Thereafter the respondent filed a writ petition for setting aside the sale which was dismissed.
        The LPA court however, on equity considerations, ordered setting aside of the sale and directed the respondent to pay Rs. 17 lacs to the Bank to be handed over to the appellant who would thereafter hand over possession to him. The respondents was also directed to pay Rs.32 lacs to the Bank in two installments.
        Bothe parties have assailed the order of the LPA Court.
       Finding of the Court:
        The auction sale, not being actuated by fraud or collusion and having been confirmed by the statutory authority cannot be assailed by anybody.
       Result : Impugned order set aside.

Judgement Key Points

Certainly. Here are the key points derived from the provided legal document:

An auction sale that has been duly conducted and confirmed by a competent authority cannot be challenged except on the grounds of fraud or collusion. (!) (!)
An unregistered agreement for sale of immovable property does not confer any legal right upon any party. (!)
A party who abandons their objections or rights in proceedings before a recovery officer or tribunal cannot later reassert those objections in a writ petition or other proceedings, especially if there has been a delay or lapse in pursuing statutory remedies. (!) (!) (!)
The statutory remedy of appeal must be availed within the prescribed time frame; failure to do so precludes the party from challenging the order or proceedings through writ jurisdiction. (!) (!) (!)
A person who does not raise objections to attachment or sale of property, and does not participate in the auction or mutation proceedings, may lose their rights to challenge the sale or subsequent transfer of the property. (!) (!)
When a property is purchased in a public auction in compliance with a court or tribunal order, and the sale is confirmed, the rights of the auction purchaser are protected and cannot be extinguished unless there is proof of fraud or collusion. (!) (!) (!)
The rights of a bona fide third-party auction purchaser are recognized and protected, even if subsequent proceedings or challenges are initiated, provided there is no evidence of fraud or collusion. (!) (!) (!) (!) (!) (!) (!) (!)
Interference with a confirmed auction sale on equitable grounds must be justified by significant factors, such as fraud, collusion, or violation of statutory procedures. Mere delay or subsequent valuation increases do not constitute sufficient grounds to set aside a sale that has been properly confirmed. (!) (!) (!)
A party who has abandoned their claim or objection, or who has not participated in the auction or mutation proceedings, cannot later claim an entitlement or right to the property, especially if they have not challenged the proceedings within the statutory or prescribed time limits. (!) (!)
The court emphasizes that the protection of third-party rights and the integrity of auction proceedings are paramount, and interference should only occur in cases of proven fraud or collusion. (!) (!) (!)

Please let me know if you need further elaboration or assistance.

Judgment :-

JagdishSingh Khehar, J.

1. On 11.9.1989, The Allahabad Bank (hereinafter referred to as ‘the Bank’) sanctioned a loan of Rs.12.70 lac to M/s. Amar Timber Works, a partnership firm having three partners, Jagmohan Singh, Payam Shoghi and Dev Kumar Sinha. The above loan was sanctioned to M/s. Amar Timber Works, after its partners had mortgaged certain properties to secure the loan amount. Since the loan amount was not repaid in compliance with the commitment made by M/s. Amar Timber Works, nine years later, in 1998, the Bank preferred Original Application No.107 of 1998 before the Debt Recovery Tribunal for the recovery of the Bank’s dues. The above Original Application was allowed on 21.11.2000. Accordingly, a direction was issued for the recovery of Rs.75,75,564/- from M/s. Amar Timber Works. For the execution of the order passed by the Debt Recovery Tribunal, the Bank initiated recovery proceedings on 28.11.2000. During the pendency of the recovery proceedings, Jagmohan Singh, one of the partners of M/s. Amar Timber Works, died (on 27.1.2004). On 16.4.2004, the Recovery Officer attached plot No.722, located at Exhibition Road, P.S. Gandhi Maidan, Patna (hereinafter referred to as ‘the property’) measuring 1298 sq.ft. It would be pertinent to mention that the aforesaid plot was in the ownership of Jagmohan Singh, one of the partners in M/s. Amar Timber Works.

2. On 10.6.2004, Harender Singh, brother of Jagmohan Singh, filed an objection petition before the Recovery Officer alleging, that the attached property did not belong to the judgment debtors, but had been purchased by him from his brother Jagmohan Singh, by executing an agreement of sale dated 10.1.1991, which was duly notarized though not registered. It would be relevant to mention, that Harender Singh pursued the objection petition filed by him before the Recovery Officer till 26.10.2005, but chose to abandon the proceedings thereafter. The order passed by the Recovery officer when the Objector was represented for the last time on 26.10.2005 is being extracted below:

“Ld. Advocate of Bank and objectors appears. Objector reiterated his points and invited attention towards Section 53 of TP Act. Counsel of the bank submits that he had to say nothing more than what was said/submitted earlier. He also submits that D.Drs. was guarantor also in this case hence his properties attached. Put up on 28.12.08 for further hearing.

Sd/- Illegible

I/C R.O.”

3. The recovery proceedings referred to above remained pending for a further period of more than two years. Finally, the Recovery Officer passed an order dated 5.5.2008, for the sale of the property by way of public auction on 4.7.2008. The Recovery Officer fixed Rs.12.92 lacs as the reserve price, and also fixed 28.8.2008 as the date of its auction. At the auction held on 28.8.2008, Sadashiv Prasad Singh, was the highest bidder. Accordingly, the Recovery Officer ordered the sale of the property in his favour on 28.8.2008. On 22.9.2008, the Recovery Officer, in the absence of any objections, confirmed the sale of the property in favour of Sadashiv Prasad Singh. The Recovery Officer also ordered, the handing over of physical possession of the property to the auction purchaser. Sadashiv Prasad Singh, the auction purchaser, took physical possession of the property on 11.3.2009.

4. In furtherance of the proceedings initiated through Mutation Case No.295/2/09-10, the land in question was mutated in favour of the auction purchaser. It would be relevant to mention that the application for mutation filed by the auction purchaser, Sadashiv Prasad Singh, was supported by letter dated 14.10.2008 of the Ministry of Finance, Government of India, Realization Authority, Patna. It would be relevant to mention, that no objections were filed in the mutation case preferred by Sadashiv Prasad Singh, by or on behalf of Harender Singh, before the Mutation Officer.

5. On 27.11.2009, CWJC No.16485 of 2009 was filed by Harender Singh before the High Cour

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2014 Supreme(SC) 21

Cases Referred (6)